Wednesday, Apr 25, 2018
One of America's Great Newspapers ~ Toledo, Ohio

2 days of fuel hikes pump area prices to $3.259 a gallon

After a little more than a month below $3 a gallon for regular, gasoline prices shot skyward again yesterday in the Toledo area, jumping more than a quarter-dollar to $3.259 at many area stations a day after creeping up to just shy of the $3 mark.

A second consecutive daily price increase, and the magnitude of the increase involved, distinguished the gasoline spike yesterday and stirred the anger of motorists such as Dawn Moore of Toledo, who railed against the increase while filling up at the Shell station at Monroe and Michigan streets.

"It's ridiculous. What's the reason behind it? That's what I'd like to know," Ms. Moore said. "There can't be a good reason. It's insane."

"I was pretty disappointed today, but you need to buy gas to survive, so what can you do? I tell you, if I still had my 10-speed, you can bet I'd be driving that for sure," said Tom Wiciak, also of Toledo, at the same Shell station.

Mike Evans, president of Atlas Oil in Taylor, Mich., said while the milder price increase on Monday was reflective of rising crude-oil prices on the world market, the sharper hike yesterday was a regional event attributable to a breakdown at a major BP refinery in Whiting, Ind., that closed a production line there late Friday.

Flooding that shut down a smaller refinery in Coffeyville, Kan., last week also has affected Midwestern gasoline supplies, he said.

"Definitely the bigger spike is because of these local problems. The crude [price] is a much smaller influence," said Mr. Evans, whose company is a major regional wholesaler and operates some Toledo-area gas stations of its own.

He and Tom Kloza, chief analyst for the Oil Price Information Service in Wall, N.J., both said that based on recent price movement along the gasoline distribution chain, prices are likely to go even higher in the near future because Ohio's wholesale prices indicate the region still has some "catching up to do."

"Ohio markets are tied to Chicago replacement costs, and those costs are at $2.80 per gallon in Chicago as of this moment," Mr. Kloza said yesterday.

"The rule of thumb is to add 60 cents per gallon [to cover taxes and mark-up] to this price and that gives you the logical target for retail" - about $3.40 per gallon.

In his blog, Speaking of Oil, Mr. Kloza wrote on Friday that "spot" gasoline markets, which underlie the wholesale prices distributors pay, were relatively inactive last week because many traders were on vacation. Yet prices still managed to climb by as much as 30 cents a gallon in the Midwest.

And that was before BP's trouble developed at Whiting.

Scott Dean, a BP spokesman, was quick to point out that besides his company's refinery problem, others in California and along the Gulf Coast were combining to have an "unprecedented" impact on supplies during the peak summer driving season.

With refining capacity otherwise running at full throttle, he said, "Any little disruption can cause tremendous volatility."

"Anytime you have problems in the refineries or the pipelines, it affects supply," agreed Angelia Graves, a spokesman for Marathon Petroleum Co. in Findlay. "Wholesale prices have been climbing and, at some point, [retailers] have to catch up with that cost."

In the Toledo area, Ms. Graves continued, retail prices tend to rise in jumps because of vigorous street-corner competition.

"If you try to do a smaller increase, it's not matched by the competition," she said.

Mr. Evans, meanwhile, said prices in southeast Michigan were well over the $3 mark at most stations before yesterday because of Detroit-area air-quality regulations that require chemical additives to the fuel during the warmer months.

Those additives contribute about 15 cents a gallon to the price of gasoline, he said.

Refinery problems also were blamed for the record-high prices that Toledo and the rest of the United States endured during mid May.

During that run-up, the national average reached $3.21 a gallon for regular grade, while the Toledo price peaked at about $3.47 a gallon, with some stations topping the $3.50 mark.

But by early June, local prices had fallen back below $3 a gallon and, at some stations, fell to around the $2.70 a gallon mark for a short time during the month.

Crude oil in May was still in the $60s per barrel. But crude now costs nearly as much on commodities markets as it did at its peak last summer, when record oil helped drive gasoline to about $3.159 a gallon locally, and crude oil accounts for more than half of refiners' input costs.

Benchmark London Brent crude settled up 62 cents at $76.40 a barrel yesterday, after trading as high as $76.63, the highest level since Aug. 10 and closing in on the record of $78.65 a barrel.

U.S. crude settled up 62 cents at $72.81 as geopolitical tensions stoked concerns about supplies.

An Iranian newspaper quoted a senior adviser to Supreme Leader Ayatollah Ali Khamenei saying Iran was producing centrifuges for refining uranium domestically, limiting the impact of U.N. sanctions.

The United States, which believes Iran is trying to build a nuclear bomb, is sending a fresh aircraft carrier to the U.S. Navy's Fifth Fleet area of operations, which includes the Gulf, to replace one of two carriers already in the region.

"It's the Iran story - that it is producing its centrifuges for refining uranium - that has turned the market around on crude," Nauman Barakat, senior vice president at Macquarie Futures USA, said of oil's rise.

However, some investors and analysts said the main market driver for crude oil was a wave of speculative investment.

Speculators boosted their net long positions in the New York Mercantile Exchange crude oil market to a record in the week to July 3, data showed.

Staff writer Maggie Reid contributed to this report. Information from The Blade's wire services also was used in this report.

Contact David Patch at:

or 419-724-6094.

Click to comment

Quis autem vel eum iure reprehenderit qui in ea voluptate velit esse quam nihil molestiae consequatur, vel illum qui dolorem?

Temporibus autem quibusdam et aut officiis debitis aut rerum necessitatibus saepe eveniet.

Copyright © 2018 Toledo Blade

To Top

Fetching stories…